V. G. Mehta s INCOME-TA X READY REC KONER

Transcription

1 ~ S E V E N T Y - T H I R D B a s e d o n F 73 Y E A R i n a n c e B O F i l l, As passed by the both Houses of Parliament P U B L I C AT I O N ~ 04 FINANCE BILL, 2011 AS PASSED BY THE BOTH HOUSES OF PARLIAMENT 34 I.T. NOTES GENERAL 54 I.T. NOTES SALARY 82 I.T. NOTES PROPERTY 88 I.T. NOTES BUSINESS & PROFESSION TM V. G. Mehta s INCOME-TA X READY REC KONER A s s e s s m e n t Y e a r WITH RATES TABLES AND EX AMPLES FOR CAPITAL GAINS WEALTH-TA X COMPANIES LIST OF BONUS SHARES GIST OF IMPORTANT CIRCUL ARS ON DIRECT TA XES FRINGE BENEFIT TA X A s s e s s m e n t Y e a r FOR DEDUCTION OF TA X FROM SAL ARIES & COMPUTATION OF ADVANCE TA X DURING THE FINANCIAL YEAR BY CA. N. V. MEHTA B.COM, LL.B. Publishers 124 I.T. NOTES CAPITAL GAINS 155 I.T. NOTES OTHER SOURCES, RETURNS, ASSESSMENT AND LOSSES 173 I.T. NOTES ASST. OF FIRMS, INT., PENALTIES, ETC. 185 FRINGE BENEFIT TAX NOTES 191 EXCLUSIONS FROM TOTAL INCOME 196 DEDUCTIONS FROM GROSS TOTAL INCOME 216 I.T. TABLES INDIVIDUALS & HUFs. FOR A. Y I.T. TABLES FIRMS, CO-OP. SOCIETY, LTD. COMPANIES FOR A. Y & WEALTH-TAX RATES, NOTES, EXAMPLE, TABLE, FOR A. Y QUOTATIONS FOR GOLD & SILVER, BONUS SHARES LIST 268 MONTHLY SALARY TABLES FOR F. Y ADVANCE TAX NOTES, INTEREST, WITH EXAMPLES 281 I.T. EXAMPLES / TABLES FOR INDIVIDUALS & HUFs. FOR A. Y GIST OF CIRCULARS 340 SEARCH & SEIZURE, TDS CHART, PRES. FORMS, OBLIGATIONS

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3 TM V. G. Mehta s INCOME-TA X READY REC KONER A s s e s s m e n t Y e a r WITH RATES TABLES AND EX AMPLES FOR CAPITAL GAINS WEALTH-TA X COMPANIES LIST OF BONUS SHARES GIST OF IMPORTANT CIRCUL ARS ON DIRECT TA XES FRINGE BENEFIT TA X A s s e s s m e n t Y e a r FOR DEDUCTION OF TA X FROM SAL ARIES & COMPUTATION OF ADVANCE TA X DURING THE FINANCIAL YEAR BY CA. N. V. MEHTA B.COM, LL.B. OUR ONLINE FEATURE Now access and refer to previous editions at the click of a mouse. Yes, we have uploaded the past eight years Income-Tax Ready Reckoner on our website in an easy-to-navigate format. View online by following the simple registration process explained on the attached scratch card. FREE!! ONLINE ACCESS Publishers Price: `510/= Court House, 2nd Floor, Dhobi Talao, Mumbai T: F: E: info@skph.co.in

4 I N D E X Page Finance Bill, 2011 as passed by the both Houses of Parliament.. 4 Salient features of the Finance Bill, 2011 as passed by the both Houses of Parliament.. 24 Short notes on Income-tax Act, 1961: I. Definitions: (a) Assessment & assessment year.. 34 (b) Previous year & assessee.. 34 (c) Resident, non-resident, etc (d) Non-resident Indian residing outside India.. 38 Deemed income with examples.. 43 Partial partition of HUF.. 46 Private discretionary trusts & Oral trusts 46 II. Charitable and religious trusts: Extent and conditions for exemptions.. 47 III. Salaries: (a) Income assessable under the head Salaries.. 54 (b) Exempt allowances u/s. 10(14).. 55 (c) Gratuities received: (1) by Government employees.. 57 (2) under the Payment of Gratuity Act, (3) by employees of private sector.. 58 (d) Relief u/s. 89 in respect of salary received in arrears, etc (e) Voluntary retirement.. 61 (f) Approved superannuation fund.. 62 (g) Encashment of earned leave.. 62 (h) Perquisites: (1) Rent-free quarters.. 65 (2) In respect of use of motor car.. 67 (3) In respect of gardener, gas, etc (4) Other fringe benefits or amenities.. 70 (5) Tax paid by employer on non-monetary perquisites.. 72 (6) Medical expenses.. 73 (i) Exempt perquisites: (1) House rent allowance.. 74 (2) Conveyance and travelling.. 76 (3) Leave travel concession.. 76 (j) Profits in lieu of salary.. 77 (k) Deductions from Salaries.. 77 (l) Deduction of source from Salaries.. 78 IV. House property: (a) Annual value.. 82 (b) Self-occupied property.. 84 (c) Deductions from property income.. 86 V. Profits and gains of business or profession: (a) Deemed income.. 88 (b) Depreciation.. 90 (c) Rates of depreciation for assessment year & onwards.. 94 (d) Additional depreciation.. 99 (e) Unabsorbed depreciation (f) Expenditure on scientific research VI. Page (g) Bonus, commission, bad debts, travelling expenditure, etc (h) Amounts not deductible (i) Special provisions for computing profits from business in certain cases 116 (j) Maintenance of books of account (k) Method of accounting (l) Compulsory audit Capital gains: (a) Definitions (b) Charge of capital gain (c) Transactions not regarded as transfer 128 (d) Mode of computation and deductions 131 (e) Notification on Cost Inflation Index 131 (f ) On depreciable assets (g) Exemptions (h) Tax on short-term capital gains where Sec. Trans. Tax paid (i) Tax on long-term capital gains VII. Income from other sources: (a) Dividends (b) Winnings from lotteries, races, etc (c) Interest on securities (d) Unexplained cash credits, etc (e) Mode of taking loans & deposits (f ) Permanent account number VIII. Returns: (a) Voluntary return (b) Loss return, belated return, revised return and defective return IX. Kinds of assessment: (a) Self-assessment (b) Acceptance of return (c) Regular and best judgment assessment 167 (d) Time limit for completion of assessment (e) Rectification of mistake X. Miscellaneous: (a) Set off and carry forward of losses (b) Speculation loss (c) Loss under head Capital gains (d) Assessment of firms and its partners 173 (e) Interest payable for defaults (f ) Interest receivable (g) Interest chart (h) Penalty chart (i) Waiver of penalty Fringe benefit tax in respect of fringe benefits Exclusions from total income: Summary of incomes which are wholly exempt from income-tax.. 191

5 I N D E X Contd. ASSESSMENT YEARS & Accounting periods: Page Deductions from gross total income: Deduction in details with limit, conditions & examples Deduction from income-tax Income-tax & addl. surcharge tables: ASSESSMENT YEAR (i) Individuals, HUFs. (specified/non-specified), AOPs., non-residents, etc.: (1) For individuals, HUFs, AOPs, non-residents, etc. other than resident individual referred to in (2) & (3) below: (ii) (iii) (iv) Taxable income between: 1,60,000 & 11,00, (2) For resident woman below age of 65 years: Taxable income between: 1,90,000 & 11,00, (3) For resident individual who is of the age of 65 years or more: Taxable income between: 2,40,000 & 11,00, Examples for deduction, etc Firms: Examples Taxable income: Between 10 & 10,00, Co-operative societies: Deductions, example & table Companies: (1) Table for income-tax & Addl. surcharge for assessment year & (2) Examples and computation of income-tax/wealth-tax for domestic companies Wealth-tax (1) Rate of wealth-tax (2) Exemptions (3) Short notes on Wealth-tax Act (4) Wealth-tax table (5) Exempted assets explained with example (6) Example for company (7) Market rates of gold and silver from to (8) List of bonus shares { Financial year ending on Financial year ending on ASSESSMENT YEAR Monthly Salary: Page For deduction of tax during the financial year : Monthly salary tables: For individuals, other than woman/sr. Citizen For woman below age of 60 years For individual aged 60 years or more but less than 80 years Deduction of source and example Advance tax Main features of payment of advance tax in respect of assessment year and onwards Income-tax & addl. surcharge tables: Advance tax: (i) Individuals, HUFs. (specified/non-specified), AOPs., non-residents, etc.: Examples for deductions, aggregation of agricultural income, etc., etc. for assessment years & Tables for income-tax & addl. surcharge for assessment year (advance tax) (ii) Firms: Taxable income between: 10 & 10,00,000 For assessment year (advance tax) (iii) Co-operative Societies: Table for income-tax & addl. surcharge for assessment year (advance tax) (iv) Companies: Table for income-tax & addl. surcharge for assessment year (advance tax) Important Circulars (1) On Finance Acts, etc (2) On deduction of source/collection of source (3) On Income-tax (4) On Wealth-tax Search and Seizure under Income-tax Act Tax Savings Plan TDS Chart Chart for deduction of source during financial year Collection of source Prescribed Forms Important Prescribed Forms under the Income-tax Rules, Obligations Statutory compliances on various dates under the Direct Tax Laws.. 352

6 FINANCE BILL 2011* 4 THE FINANCE BILL, 2011* A BILL to give effect to the financial proposals of the Central Government for the financial year BE it enacted by Parliament in the Sixty-second Year of the Republic of India as follows: CHAPTER I : PRELIMINARY 1. Short title and commencement. (1) This Act may be called the Finance Act, (2) Save as otherwise provided in this Act, sections 2 to 35 shall be deemed to have come into force on the 1st day of April, CHAPTER II : RATES OF INCOME-TAX 2. Income-tax. (1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 2011, income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax shall be increased by a surcharge, for purposes of the Union, calculated in each case in the manner provided therein. (2) In the cases to which Paragraph A of Part I of the First Schedule applies, where the assessee has, in the previous year, any net agricultural income exceeding five thousand rupees, in addition to total income, and the total income exceeds one lakh sixty thousand rupees, then, (a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after the first one lakh sixty thousand rupees of the total income but without being liable to tax], only for the purpose of charging income-tax in respect of the total income; and (b) the income-tax chargeable shall be calculated as follows: (i) the total income and the net agricultural income shall be aggregated and the amount of income-tax shall be determined in respect of the aggregate income at the rates specified in the said Paragraph A, as if such aggregate income were the total income; (ii) the net agricultural income shall be increased by a sum of one lakh sixty thousand rupees, and the amount of income-tax shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Paragraph A, as if the net agricultural income as so increased were the total income; (iii) the amount of income-tax determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax in respect of the total income: Provided that in the case of every woman, resident in India and below the age of sixty-five years at any time during the previous year, referred to in item (II) of Paragraph A of Part I of the First Schedule, the provisions of this sub-section shall have effect as if for the words one lakh sixty thousand rupees, the words one lakh ninety thousand rupees had been substituted: Provided further that in the case of every individual, being a resident in India, who is of the age of sixty-five years or more at any time during the previous year, referred to in item (III) of Paragraph A of Part I of the First Schedule, the provisions of this sub-section shall have effect as if for the words one lakh sixty thousand rupees, the words two lakh forty thousand rupees had been substituted. (3) In cases to which the provisions of Chapter XII or Chapter Xll-A or section 115JB or sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) apply, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section, as the case may be: Provided that the amount of income-tax computed in accordance with the provisions of section 111A or section 112 shall be increased by a surcharge, for purposes of the Union, as provided in Paragraph A, B, C, D or E, as the case may be, of Part I of the First Schedule: Provided further that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115E and 115JB of the Income-tax Act, the amount of income-tax computed under this sub-section shall be increased by a surcharge, for purposes of the Union, calculated, (a) in the case of a domestic company, at the rate of seven and one-half per cent. of such income-tax where the total income exceeds one crore rupees; * As passed by the both Houses of Parliament.

7 5 FINANCE BILL 2011* (b) in the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such income-tax where the total income exceeds one crore rupees: Provided also that in the case of every company having total income chargeable to tax under section 115JB of the Income-tax Act, and such income exceeds one crore rupees, the total amount payable as income-tax and surcharge on such income-tax shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. (4) In cases in which tax has to be charged and paid under section 115-O or sub-section (2) of section 115R of the Income-tax Act, the tax shall be charged and paid at the rates as specified in those sections and shall be increased by a surcharge, for purposes of the Union, calculated at the rate of five per cent. of such tax. (5) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, at the rates in force, the deductions shall be made at the rates specified in Part II of the First Schedule and shall be increased by a surcharge, for purposes of the Union, calculated in cases wherever prescribed, in the manner provided therein. (6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE, 194F, 194G, 194H, 194-1, 194J, 194LA, 194LB, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge, for purposes of the Union, in the case of every company, other than a domestic company, calculated at the rate of two per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees. (7) In cases in which tax has to be collected under the proviso to section 194B of the Income-tax Act, the collection shall be made at the rates specified in Part II of the First Schedule, and shall be increased by a surcharge, for purposes of the Union, calculated, in cases wherever prescribed, in the manner provided therein. (8) In cases in which tax has to be collected under section 206C of the Income-tax Act, the collection shall be made at the rates specified in that section and shall be increased by a surcharge, for purposes of the Union, in the case of every company, other than a domestic company, calculated at the rate of two per cent. of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds one crore rupees. (9) Subject to the provisions of sub-section (10), in cases in which income-tax has to be charged under sub-section (4) of section 172 or sub-section (2) of section 174 or section 174A or section 175 or sub-section (2) of section 176 of the Income-tax Act or deducted from, or paid on, income chargeable under the head Salaries under section 192 of the said Act or in which the advance tax payable under Chapter XVII-C of the said Act has to be computed at the rate or rates in force, such income-tax or, as the case may be, advance tax shall be so charged, deducted or computed at the rate or rates specified in Part III of the First Schedule and such tax shall be increased by a surcharge, for purposes of the Union, calculated in such cases and in such manner as provided therein: Provided that in cases to which the provisions of Chapter XII or Chapter Xll-A or section 115JB or section 115JC or sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act apply, advance tax shall be computed with reference to the rates imposed by this sub-section or the rates as specified in that Chapter or section, as the case may be: Provided further that the amount of advance tax computed in accordance with the provisions of section 111A or section 112 of the Income-tax Act shall be increased by a surcharge, for purposes of the Union, as provided in Paragraph E of Part III of the First Schedule pertaining to the case of a company: Provided also that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115BBD, 115E and 115JB of the Income-tax Act, advance tax computed under the first proviso shall be increased by a surcharge, for purposes of the Union, calculated, (a) in the case of every domestic company, at the rate of five per cent. of such advance tax where the total income exceeds one crore rupees; (b) in the case of every company, other than a domestic company, at the rate of two per cent. of such advance tax where the total income exceeds one crore rupees: Provided also that in the case of every company having total income chargeable to tax under section 115JB of the Income-tax Act, and such income exceeds one crore rupees, the total amount payable as advance tax on such income and surcharge thereon, shall not exceed the total amount payable as advance tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. (10) In cases to which Paragraph A of Part III of the First Schedule applies, where the assessee has, in the previous year or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in * As passed by the both Houses of Parliament.

8 FINANCE BILL 2011* 6 respect of the income of a period other than the previous year, in such other period, any net agricultural income exceeding five thousand rupees, in addition to total income and the total income exceeds one lakh eighty thousand rupees, then, in charging income-tax under sub-section (2) of section 174 or section 174A or section 175 or sub-section (2) of section 176 of the said Act or in computing the advance tax payable under Chapter XVII-C of the said Act, at the rate or rates in force, (a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after the first one lakh eighty thousand rupees of the total income but without being liable to tax], only for the purpose of charging or computing such income-tax or, as the case may be, advance tax in respect of the total income; and (b) such income-tax or, as the case may be, advance tax shall be so charged or computed as follows: (i) the total income and the net agricultural income shall be aggregated and the amount of income-tax or advance tax shall be determined in respect of the aggregate income at the rates specified in the said Paragraph A, as if such aggregate income were the total income; (ii) the net agricultural income shall be increased by a sum of one lakh eighty thousand rupees, and the amount of income-tax or advance tax shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Paragraph A, as if the net agricultural income were the total income; (iii) the amount of income-tax or advance tax determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax or, as the case may be, advance tax determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax or, as the case may be, advance tax in respect of the total income: Provided that in the case of every woman, resident in India and below the age of sixty years at any time during the previous year, referred to in item (II) of Paragraph A of Part III of the First Schedule, the provisions of this sub-section shall have effect as if for the words one lakh eighty thousand rupees, the words one lakh ninety thousand rupees had been substituted: Provided further that in the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year, referred to in item (III) of Paragraph A of Part III of the First Schedule, the provisions of this sub-section shall have effect as if for the words one lakh eighty thousand rupees, the words two lakh fifty thousand rupees had been substituted: Provided also that in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year, referred to in item (IV) of Paragraph A of Part III of the First Schedule, the provisions of this sub-section shall have effect as if for the words one lakh eighty thousand rupees, the words five lakh rupees had been substituted. (11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by the applicable surcharge, for purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for purposes of the Union, to be called the Education on income-tax, calculated at the rate of two per cent. of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance universalised quality basic education: Provided that nothing contained in this sub-section shall apply to cases in which tax is to be deducted or collected under the sections of the Income-tax Act mentioned in sub-sections (5), (6), (7) and (8), if the income subjected to deduction of tax at source or collection of tax at source is paid to a domestic company and any other person who is resident in India. (12) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by the applicable surcharge, for purposes of the Union, calculated in the manner provided therein, shall also be increased by an additional surcharge, for purposes of the Union, to be called the Secondary and Higher Education on income-tax, calculated at the rate of one per cent. of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance secondary and higher education: Provided that nothing contained in this sub-section shall apply to cases in which tax is to be deducted or collected under the sections of the Income-tax Act mentioned in sub-sections (5), (6), (7) and (8), if the income subjected to deduction of tax at source or collection of tax at source is paid to a domestic company and any other person who is resident in India. (13) For the purposes of this section and the First Schedule, (a) domestic company means an Indian company or any other company which, in respect of its income liable to income-tax under the Income-tax Act, for the assessment year commencing on the * As passed by the both Houses of Parliament.

9 7 FINANCE BILL 2011* 1st day of April, 2011, has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of such income; (b) insurance commission means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance); (c) net agricultural income, in relation to a person, means the total amount of agricultural income, from whatever source derived, of that person computed in accordance with the rules contained in Part IV of the First Schedule; (d) all other words and expressions used in this section and the First Schedule but not defined in this sub-section and defined in the Income-tax Act shall have the meanings, respectively, assigned to them in that Act. CHAPTER III : DIRECT TAXES Income-tax 3. Amendment of section 2. In section 2 of the Income-tax Act, in clause (15), in the second proviso, for the words ten lakh rupees, the words twenty-five lakh rupees shall be substituted with effect from the 1st day of April, Amendment of section 10. In section 10 of the Income-tax Act, (a) in clause (34), the Explanation [as so inserted by the Special Economic Zones Act, 2005] shall be omitted with effect from the 1st day of June, 2011; (b) after clause (44), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2008, namely: (45) any allowance or perquisite, as may be notified by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission; ; (c) after clause (45) as so inserted, the following shall be inserted with effect from the 1st day of June, 2011, namely: (46) any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called) which (a) has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public; (b) is not engaged in any commercial activity; and (c) is notified by the Central Government in the Official Gazette for the purposes of this clause. Explanation. For the purposes of this clause, specified income means the income, of the nature and to the extent arising to a body or authority or Board or Trust or Commission (by whatever name called) referred to in this clause, which the Central Government may, by notification in the Official Gazette, specify in this behalf; (47) any income of an infrastructure debt fund, set up in accordance with the guidelines as may be prescribed, which is notified by the Central Government in the Official Gazette for the purposes of this clause.. 5. Amendment of section 35. In section 35 of the Income-tax Act, in sub-section (2AA), in clause (a), for the words one and three-fourth, the word two shall be substituted with effect from the 1st day of April, Amendment of section 35AD. In section 35AD of the Income-tax Act, (a) in sub-section (5), with effect from the 1st day of April, 2012, (i) in clause (ac), the word and occurring at the end shall be omitted; (ii) after clause (ac), the following clauses shall be inserted, namely: (ad) on or after the 1st day of April, 2011, where the specified business is in the nature of developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed; (ae) on or after the 1st day of April, 2011, in a new plant or in a newly installed capacity in an existing plant for production of fertilizer; and ; * As passed by the both Houses of Parliament.

10 FINANCE BILL 2011* 8 (iii) in clause (b), for the words, brackets and letters and clause (ac), the words, brackets and letters clause (ac), clause (ad) and clause (ae) shall be substituted; (b) in sub-section (8), in clause (c), (i) in sub-clause (iv), for the words new hotel, the word hotel shall be substituted; (ii) in sub-clause (v), for the words new hospital, the word hospital shall be substituted; (iii) after sub-clause (vi), the following sub-clauses shall be inserted with effect from the 1st day of April, 2012, namely: (vii) developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed; (viii) production of fertilizer in India;. 7. Amendment of section 36. In section 36 of the Income-tax Act, in sub-section (1), after clause (iv), the following shall be inserted with effect from the 1st day of April, 2012, namely: (iva) any sum paid by the assessee as an employer by way of contribution towards a pension scheme, as referred to in section 80CCD, on account of an employee to the extent it does not exceed ten per cent. of the salary of the employee in the previous year. Explanation. For the purposes of this clause, salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites;. 8. Amendment of section 40A. In section 40A of the Income-tax Act, in sub-section (9), after the words, brackets and figures under clause (iv), the words, brackets, figures and letter or clause (iva) shall be inserted with effect from the 1st day of April, Amendment of section 80CCE. In section 80CCE of the Income-tax Act, for the word, figures and letters section 80CCD, the words, brackets, figures and letters sub-section (1) of section 80CCD shall be substituted with effect section from the 1st day of April, Amendment of section 80CCF. In section 80CCF of the Income-tax Act, after the words, figures and letters previous year relevant to the assessment year beginning on the 1st day of April, 2011, the words, figures and letters or to the assessment year beginning on the 1st day of April, 2012 shall be inserted with effect from the 1st day of April, Amendment of section 80-IA. In section 80-IA of the Income-tax Act, in sub-section (4), in clause (iv), for the words, figures and letters the 31st day of March, 2011, wherever they occur, the words, figures and letters the 31st day of March, 2012 shall be substituted with effect from the 1st day of April, Amendment of section 80-IB. In section 80-IB of the Income-tax Act, in sub-section (9), in clause (ii), the following proviso shall be inserted with effect from the 1st day of April, 2012, namely: Provided that the provisions of this clause shall not apply to blocks licensed under a contract awarded after the 31st day of March, 2011 under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated the 10th February, 1999 or in pursuance of any law for the time being in force or by the Central or a State Government in any other manner;. 13. Amendment of section 92C. In section 92C of the Income-tax Act, in sub-section (2), in the second proviso, for the words five per cent. of the latter, the words such percentage of the latter, as may be notified by the Central Government in the Official Gazette in this behalf shall be substituted with effect from the 1st day of April, Amendment of section 92CA. In section 92CA of the Income-tax Act, with effect from the 1st day of June, 2011, (i) after sub-section (2), the following sub-section shall be inserted, namely: (2A) Where any other international transaction [other than an international transaction referred under sub-section (1)], comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such other international transaction is an international transaction referred to him under sub-section (1). ; (ii) in sub-section (7), after the word and figures section 133, the words, figures and letter or section 133A shall be inserted. 15. Insertion of new section 94A. After section 94 of the Income-tax Act, the following section shall be inserted with effect from the 1st day of June, 2011, namely: 94A. Special measures in respect of transactions with persons located in notified jurisdictional area. (1) The Central Government may, having regard to the lack of effective exchange of information with any country or territory outside India, specify by notification in the Official Gazette such country or territory as a notified jurisdictional area in relation to transactions entered into by any assessee. * As passed by the both Houses of Parliament.

11 9 FINANCE BILL 2011* (2) Notwithstanding anything to the contrary contained in this Act, if an assessee enters into a transaction where one of the parties to the transaction is a person located in a notified jurisdictional area, then (i) all the parties to the transaction shall be deemed to be associated enterprises within the meaning of section 92A; (ii) any transaction in the nature of purchase, sale or lease of tangible or intangible property or provision of service or lending or borrowing money or any other transaction having a bearing on the profits, income, losses or assets of the assessee including a mutual agreement or arrangement for allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided by or to the assessee shall be deemed to be an international transaction within the meaning of section 92B, and the provisions of sections 92, 92A, 92B, 92C [except the second proviso to sub-section (2)], 92CA, 92CB, 92D, 92E and 92F shall apply accordingly. (3) Notwithstanding anything to the contrary contained in this Act, no deduction, (a) in respect of any payment made to any financial institution located in a notified jurisdictional area shall be allowed under this Act, unless the assessee furnishes an authorisation in the prescribed form authorising the Board or any other income-tax authority acting on its behalf to seek relevant information from the said financial institution on behalf of such assessee; and (b) in respect of any other expenditure or allowance (including depreciation) arising from the transaction with a person located in a notified jurisdictional area shall be allowed under any other provision of this Act, unless the assessee maintains such other documents and furnishes such information as may be prescribed, in this behalf. (4) Notwithstanding anything to the contrary contained in this Act, where, in any previous year, the assessee has received or credited any sum from any person located in a notified jurisdictional area and the assessee does not offer any explanation about the source of the said sum in the hands of such person or in the hands of the beneficial owner (if such person is not the beneficial owner of the said sum) or the explanation offered by the assessee, in the opinion of the assessing officer, is not satisfactory, then, such sum shall be deemed to be the income of the assessee for that previous year. (5) Notwithstanding anything contained in any other provisions of this Act, where any person located in a notified jurisdictional area is entitled to receive any sum or income or amount on which tax is deductible under Chapter XVII-B, the tax shall be deducted at the highest of the following rates, namely: (a) at the rate or rates in force; (b) at the rate specified in the relevant provisions of this Act; (c) at the rate of thirty per cent. (6) In this section, (i) person located in a notified jurisdictional area shall include, (a) a person who is resident of the notified jurisdictional area; (b) a person, not being an individual, which is established in the notified jurisdictional area; or (c) a permanent establishment of a person not falling in sub-clause (a) or sub-clause (b), in the notified jurisdictional area; (ii) permanent establishment shall have the same meaning as defined in clause (iiia) of section 92F; (iii) transaction shall have the same meaning as defined in clause (v) of section 92F Amendment of section 115A. In section 115A of the Income-tax Act, in sub-section (1), in clause (a), with effect from the 1st day of June, 2011, (a) in sub-clause (ii), after the words foreign currency, the words, brackets, figures and letter not being interest of the nature referred to in clause (iia) shall be inserted; (b) after sub-clause (ii), the following sub-clause shall be inserted, namely: (iia) interest received from an infrastructure debt fund referred to in clause (47) of section 10; or ; (c) after item (B), the following item shall be inserted, namely: * As passed by the both Houses of Parliament.

12 FINANCE BILL 2011* 10 (BA) the amount of income-tax calculated on the amount of income by way of interest referred to in sub-clause (iia), if any, included in the total income, at the rate of five per cent.; ; (d) in item (D), after the word, brackets and figures sub-clause (ii), the word, brackets, figures and letter, sub-clause (iia) shall be inserted. 17. Insertion of new section 115BBD. After section 115BBC of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2012, namely: 115BBD. Tax on certain dividends received from foreign companies. (1) Where the total income of an assessee, being an Indian company, for the previous year relevant to the assessment year beginning on the 1st day of April, 2012 includes any income by way of dividends declared, distributed or paid by a specified foreign company, the income-tax payable shall be the aggregate of (a) the amount of income-tax calculated on the income by way of such dividends, at the rate of fifteen per cent.; and (b) the amount of income-tax with which the assessee would have been chargeable had its total income been reduced by the aforesaid income by way of dividends. (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends referred to in sub-section (1). (3) In this section, (i) dividends shall have the same meaning as is given to dividend in clause (22) of section 2 but shall not include sub-clause (e) thereof; (ii) specified foreign company means a foreign company in which the Indian company holds twenty-six per cent. or more in nominal value of the equity share capital of the company Amendment of section 115JB. In section 115JB of the Income-tax Act, (i) in sub-section (1), with effect from the 1st day of April, 2012, (a) for the words, figures and letters the 1st day of April, 2011, the words, figures and letters the 1st day of April, 2012 shall be substituted; (b) for the words eighteen per cent., at both the places where they occur, the words eighteen and one-half per cent. shall be substituted; (ia) after sub-section (2), in Explanation 1, clause (iv), clause (v) and clause (vi) shall be omitted and shall be deemed to have been omitted with effect from the 1st day of April, 2005; (ii) in sub-section (6) [as so inserted by the Special Economic Zones Act, 2005], the following proviso shall be inserted with effect from the 1st day of April, 2012, namely: Provided that the provisions of this sub-section shall cease to have effect in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, Insertion of new Chapter XII-BA. After Chapter XII-B of the Income-tax Act, the following Chapter shall be inserted with effect from the 1st day of April, 2012, namely: CHAPTER XII-BA SPECIAL PROVISIONS RELATING TO CERTAIN LIMITED LIABILITY PARTNERSHIPS 115JC. Special provisions for payment of tax by certain limited liability partnerships. (1) Notwithstanding anything contained in this Act, where the regular income-tax payable for a previous year by a limited liability partnership is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of the limited liability partnership for such previous year and it shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent. (2) Adjusted total income referred to in sub-section (1) shall be the total income before giving effect to this Chapter as increased by (i) deductions claimed, if any, under any section included in Chapter Vl-A under the heading C. Deductions in respect of certain incomes ; and (ii) deduction claimed, if any, under section 10AA. (3) Every limited liability partnership to which this section applies shall obtain a report, in such form as may be prescribed, from an accountant certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with the provisions of this Chapter and furnish such report on or before the due date of filing of return under sub-section (1) of section 139. * As passed by the both Houses of Parliament.

13 11 FINANCE BILL 2011* 115JD. Tax credit for alternate minimum tax. (1) The credit for tax paid by a limited liability partnership under section 115JC shall be allowed to it in accordance with the provisions of this section. (2) The tax credit of an assessment year to be allowed under sub-section (1) shall be the excess of alternate minimum tax paid over the regular income-tax payable of that year. (3) No interest shall be payable on tax credit allowed under sub-section (1). (4) The amount of tax credit determined under sub-section (2) shall be carried forward and set off in accordance with the provisions of sub-sections (5) and (6) but such carry forward shall not be allowed beyond the tenth assessment year immediately succeeding the assessment year for which tax credit becomes allowable under sub-section (1). (5) In any assessment year in which the regular income-tax exceeds the alternate minimum tax, the tax credit shall be allowed to be set off to the extent of the excess of regular income-tax over the alternate minimum tax and the balance of the tax credit, if any, shall be carried forward. (6) If the amount of regular income-tax or the alternate minimum tax is reduced or increased as a result of any order passed under this Act, the amount of tax credit allowed under this section shall also be varied accordingly. 115JE. Application of other provisions of this Act. Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to a limited liability partnership referred to in this Chapter. 115JF. Interpretation in this Chapter. In this Chapter (a) accountant shall have the same meaning as in the Explanation below sub-section (2) of section 288; (b) alternate minimum tax means the amount of tax computed on adjusted total income at a rate of eighteen and one-half per cent.; (c) limited liability partnership shall have the same meaning as assigned to it in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008; (d) regular income-tax means the income-tax payable for a previous year by a limited liability partnership on its total income in accordance with the provisions of this Act other than the provisions of this Chapter Amendment of section 115O. In section 115-O of the Income-tax Act, in sub-section (6) [as so inserted by the Special Economic Zones Act, 2005], the following proviso shall be inserted with effect from the 1st day of June, 2011, namely: Provided that the provisions of this sub-section shall cease to have effect from the 1st day of June, Amendment of section 115R. In section 115R of the Income-tax Act, in sub-section (2), with effect from the 1st day of June, 2011, (a) in clause (i), for the words income distributed, the words income distributed to any person being an individual or a Hindu undivided family shall be substituted; (b) after clause (i), the following clause shall be inserted, namely: (ia) thirty per cent. on income distributed to any other person by a money market mutual fund or a liquid fund; ; (c) in clause (iii), for the words twenty per cent., the words thirty per cent. shall be substituted. June, 2011, (i) 22. Amendment of section 131. In section 131 of the Income-tax Act, with effect from the 1st day of after sub-section (1A), the following sub-section shall be inserted, namely: (2) For the purpose of making an inquiry or investigation in respect of any person or class of persons in relation to an agreement referred to in section 90 or section 90A, it shall be competent for any income-tax authority not below the rank of Assistant Commissioner of Income-tax, as may be notified by the Board in this behalf, to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before it or any other income-tax authority. ; (ii) in sub-section (3), after the words, brackets, figure and letter or sub-section (1A), the words, brackets and figure or sub-section (2) shall be inserted. * As passed by the both Houses of Parliament.

14 FINANCE BILL 2011* Amendment of section 133. In section 133 of the Income-tax Act, after the second proviso, the following proviso shall be inserted with effect from the 1st day of June, 2011, namely: Provided also that for the purposes of an agreement referred to in section 90 or section 90A, an income-tax authority notified under sub-section (2) of section 131 may exercise all the powers conferred under this section, notwithstanding that no proceedings are pending before it or any other income-tax authority Amendment of section 139. In section 139 of the Income-tax Act, (a) in sub-section (1), in Explanation 2, (i) in clause (a), in sub-clause (i), after the words a company, the words, brackets and letters other than a company referred to in clause (aa) shall be inserted; (ii) after clause (a), the following clause shall be inserted, namely: (aa) in the case of an assessee being a company, which is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year; ; (b) after sub-section (1B), the following sub-section shall be inserted with effect from the 1st day of June, 2011, namely: (1C) Notwithstanding anything contained in sub-section (1), the Central Government may, by notification in the Official Gazette, exempt any class or classes of persons from the requirement of furnishing a return of income having regard to such conditions as may be specified in that notification. ; (c) in sub-section (4C), with effect from the 1st day of June, 2011, (i) after clause (f) and before the words shall, if the total income, the following clauses shall be inserted, namely: (g) body or authority or Board or Trust or Commission (by whatever name called) referred to in clause (46) of section 10; (h) infrastructure debt fund referred to in clause (47) of section 10, ; (ii) after the words medical institution or trade union, the words or body or authority or Board or Trust or Commission or infrastructure debt fund shall be inserted. 25. Amendment of section 143. In section 143 of the Income-tax Act, in sub-section (1B), for the words, figures and letters the 31st day of March, 2011, the words, figures and letters the 31st day of March, 2012 shall be substituted. 26. Amendment of section 153. In section 153 of the Income-tax Act, in Explanation 1, with effect from the 1st day of June, 2011, (a) in clause (vii), for the word, figures and letter section 245R,. the words, figures and letter section 245R, or shall be substituted; (b) after clause (vii) and before the words shall be excluded, the following clause shall be inserted, namely: (viii) the period commencing from the date on which a reference for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information so requested is received by the Commissioner or a period of six months, whichever is less,. 27. Amendment of section 153B. In section 153B of the Income-tax Act, in sub-section (1), in the Explanation, with effect from the 1st day of June, 2011, (a) in clause (vii), for the words by the Commissioner,, the words by the Commissioner; or shall be substituted; (b) after clause (vii) and before the words shall be excluded, the following clause shall be inserted, namely: (viii) the period commencing from the date on which a reference for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information so requested is received by the Commissioner or a period of six months, whichever is less,. * As passed by the both Houses of Parliament.

15 13 FINANCE BILL 2011* 28. Insertion of new section 194LB. After section 194LA of the Income-tax Act, the following section shall be inserted with effect from the 1st day of June 2011, namely: 194LB. Income by way of interest from infrastructure debt fund. Where any income by way of interest is payable to a non-resident, not being a company, or to a foreign company, by an infrastructure debt fund referred to in clause (47) of section 10, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent Amendment of section 245C. In section of the Income-tax Act, in sub-section (1), with effect from the 1st day of June, 2011, (a) in the proviso, after clause (i), the following clause shall be inserted, namely: (ia) in a case where (A) the applicant is related to the person referred to in clause (i) who has filed an application (hereafter in this sub-section referred to as specified person ); and (B) the proceedings for assessment or re-assessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of the applicant, being a person referred to in section 153A or section 153C, have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, ; (b) after the proviso, the following Explanation shall be inserted, namely: Explanation. For the purposes of clause (ia), (a) the applicant, in relation to the specified person referred to in clause (ia), means, (i) where the specified person is an individual, any relative of the specified person; (ii) where the specified person is a company, firm, association of persons or Hindu undivided family, any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; (ii) any individual who has a substantial interest in the business or profession of the specified person, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the specified person or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the specified person; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession, (A) where the specified person being an individual, or any relative of such specified person, has a substantial interest in the business or profession of that person; or (B) where the specified person being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person; (b) a person shall be deemed to have a substantial interest in a business or profession, if (A) in a case where the business or profession is carried on by a company, such person is, at any time during the previous year, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, whether with or without a right to participate in profits) carrying not less than twenty per cent. of the voting power; and (B) in any other case, such person is, at any time during the previous year, beneficially entitled to not less than twenty per cent. of the profits of such business or profession.. * As passed by the both Houses of Parliament.